Real estate magnate Harold Crye, co-founder and CEO of Crye-Leike Realtors the fifth largest real estate firm in the nation, sees big possibilities in Northwest Arkansas.
When the tall, confident businessman came to town in March 2007, he laid down a $10 million bet that he could be a major player in this highly competitive market.
Crye, an Oseola native, said anyone who thinks big, has to be in Northwest Arkansas. So he and partner Dick Leike expanded here as the firm already ranked No.1 in Little Rock and among the top firms in Memphis.
He said at the time he didn’t expect to make a dime in this market for the first three years, but Wednesday (Jan. 30) Crye said the region’s performance has more than exceeded his original expectations.
“We knew this was a competitive place to do business, but we committed to be here for the long term and it’s paying off nicely,” Crye said at the company’s annual kick-off breakfast in Rogers on Wednesday.
The Northwest Arkansas division has increased its sales each year, even through the toughest of times in 2009 and 2010, when the foreclosure market took center stage.
Crye-Leike NWA reports $333 million in sales last year, with 2,101 units sold. This was a 20% gain of sales volume over 2011. The local goal for last year was $300 million.
NWA Market Sales Results
2012 $333 million
2011 $277 million
2010 $255 million
2009 $182 million
2008 $130 million
2007 $76 million
In 2007, Crye said he expected to rank No. 1 in unit sales in this region within four years. Wednesday, he said the firm ranked second behind Coldwell Banker Harris McHaney Faucette, and one spot ahead of Lindsey & Associates.
“If Coldwell Banker and Harris McHaney had not merged a couple of years ago, I believe we would have reached that goal. But the top three firms are neck in neck in this market year-in and year-out,”
Real Estate Company Rankings (by unit sales)
No. 1 Coldwell Banker Harris McHaney Faucette: 2,689 sales
No. 2 Crye-Leike: 2,032 sales
No. 3 Lindsey & Associates: 1,939 sales
No. 4 Weichert Griffin: 1,317 sales
No. 5 ReMax: 808 sales
Source:Crye-Leike and the Multiple Listing Service.
Crye challenged the local agents to work referrals and gear up for what he believes will be a good year. In his crystal ball forecast, Crye sees opportunities on a number of levels. The goal for the NWA division is $370 million this year, an annual increase of 10%.
He said the firm will continue to grow its property rental business because the pool of renters is only going to increase over the next few years as thousands will not be able to qualify for home loans because of recent foreclosures or other credit issues related to prolonged underemployment issues.
That said, Crye fully expects a record year for real estate sales citing low interest rates, recovering economy and fewer foreclosures after 2014.
“Investors are buying property by the millions across this country because they see the demand for rentals and potential for price appreciation in five to seven years. I have been working with a Wall Street firm who was looking to spend $450 million in cash in the Atlanta and Memphis markets. There has to be investors in this market too and this presents good opportunities to close sales,” Crye said.
He said those agents who have worked the foreclosure market nearly exclusively for the past few years need to begin to transition their business to normal sales because the rate of default continues to decline.
Home prices have started to rebound and Crye expects this to continue because supplies remain at a low levels as builders are still somewhat constrained by tighter lending practices. He expects home prices could grow 15% over the next three years, helping to restore household wealth and future improve consumer confidence.
Crye warned agents that as the real estate market improves more folks will likely want to join their profession after several years of declining numbers. The agent count in Northwest Arkansas totaled 1,554 at the end of 2012, down from roughly 2,300 in 2007.
Crye said agent retention has been better in Northwest Arkansas than many other markets. For instance, the total agent count throughout Memphis dropped nearly 50% during the toughest years.
Companywide, Crye-Leike’s agent count is roughly 3,000 agents down from 3,500 in 2007.
Throughout the nine markets that Crye-Leike operates, the firm posted $4.5 billion in sales during 2012. The goal was $4 billion, a mark Crye said the firm had tried to reach for three years prior.
He said the past few years have been challenging for the industry and Crye-Leike was not immune as sales plummeted from $6 billion down to $3.8 billion during the housing bust and subsequent recovery.
He quoted Dale Earnhardt Sr. by saying: “You can’t wait for the storm to pass, sometimes you have to drive in the rain.”
Crye added, “You have all worked in that rain for the past four or five years, up to your knees in mud at times. As a firm we have had to dance pretty fast to keep up and stay afloat through some pretty lean years, but 2012 was a break-out year for real estate and the future looks quite promising.”